MAYBANK ISLAMIC BERHAD v 1. ) Vida Beauty Sdn Bhd 2. ) Hasmiza Binti Othman

Case Significance

Addresses deemed service by contractual registered post in a default-judgment set-aside, and holds that ibra' applies only to early settlement and not on default, while confirming a creditor's immediate recourse against a guarantor in Islamic financing.

This High Court decision concerns an application to set aside a judgment in default of appearance obtained by Maybank Islamic Berhad against a corporate borrower and an individual guarantor arising from an Islamic financing facility. The application to set aside was brought under Order 10 rule 3, Order 42 rule 13 and Order 92 rule 4 of the Rules of Court 2012, and the court addressed both the regularity of the judgment and whether the defendants had a defence on the merits. On regularity, the court examined service and held that service effected by prepaid registered post in accordance with the contract was deemed complete (deemed service), so that the default judgment had been regularly obtained; it also weighed the defendants' delay in filing the set-aside application and whether that delay had been satisfactorily explained. On the merits, the court considered the substance of the Islamic-banking claim under a Commodity Murabahah financing. It addressed the acceleration clause and the bank's right to claim the full Bank Sale Price upon default, rejecting the contention that the claim was premature, and dealt with the argument on ibra' (a rebate of unearned profit), holding that ibra' operates in the context of early settlement and does not apply in a situation of default. It further addressed the guarantee, confirming the creditor's right to claim against the guarantor without first having to realise the security or charged property. Taken together, these findings meant that the defendants had not shown a meritorious defence sufficient to disturb a regularly obtained default judgment. The judgment is a useful statement on deemed service by contractual post, the limited role of ibra' outside early settlement, and a creditor's immediate recourse against a guarantor in Islamic financing. Together the findings illustrate that a regularly obtained default judgment will not be reopened where the proposed defence lacks merit and the delay in applying to set it aside remains unexplained.